Family Ties

For as long as Matt Allen can remember, his father ran his own accounting firm. He recalls dinnertime conversations about the business, and clients coming to the house. With an accounting degree in hand, he went to work for his father knowing that, if he wanted, he could take over the firm some day. “Most of our clients were also family businesses,” he says. “So I grew up knowing the founding fathers or mothers, and then I worked with their sons or daughters. It was a neat, long history.”

Six months later, however, Allen knew he wanted out. “The family relationship was fine,” he says. “My relationship with accounting was not as good.” Eventually, Allen earned a PhD from Cornell, focusing his research on small businesses. Most are family owned, which renewed his interest in the dynamics of these generational operations.

Now at Babson for almost a year, Allen came to help raise the profile of family businesses and entrepreneurship at the College. He takes on the dual roles of assistant professor of entrepreneurship, one of his classes being an undergraduate course on family business, and research director for the Successful Transgenerational Entrepreneurship Practices (STEP) Project. He also plans to revive the Institute for Family Entrepreneurship.

Q: Why is STEP important?A: That’s a big question. We know that more than 80 percent of U.S. businesses, and if you go to Europe and Latin America and Asia, upward of 90 percent of businesses, are family owned. They represent the majority of most economies, and we just don’t have a clear understanding of who they are. We teach about the typical, publicly traded Fortune 500, Fortune 100 organizations, but the reality is they don’t represent the majority of businesses out there. So in my mind, we need to understand this category.

Q: What is the Institute for Family Entrepreneurship?A: Organizationally, it sits within the Blank Center. It’s not new, but it’s been dormant. The goal is to revive it and make it the center for everything related to family business at Babson. We have a large student population who come from family businesses, as well as a huge alumni base of family businesses. We haven’t tapped these very well. They could be a great resource, and we could be a great resource to them, too.

Q: In what ways?A: We’re still forming our plans, but we could share research and provide access to classes. We’re also talking about internships— almost like a family business employee exchange program. A lot of times, family businesses want their children to get work experience outside the business. So we’re looking at a scenario where one family business might take a Babson student in exchange for their son or daughter going to another family business. We also may have annual meetings where we invite alumni so we can present current research, let them network with each other and with students, and possibly create some mentoring relationships. In my course, I have 24 students who represent 23 family businesses—one student is partnering with her friend, who is part of a family business. All of the businesses are so different. They’re all around the world and range in size from relatively small to enormous. Every class I have a couple of students report on their family’s business, and it’s just fascinating. These students come here, they spend their two or four years at Babson, and they go back to these fantastic organizations, and very few people ever realize what they’re doing. Talk about a resource. —DC